Robinhood was one of the first commission free trading platforms in the world, not just on stocks, but also options and cryptocurrency. Causing competitors such as Fidelity, E-Trade and Charles Schwab to do the same. This, coupled with no minimum investment, Robinhood seem to be achieving their goal of making investing easy and accessible to everyone, with their target customer base being millenials and gen z users new to investing.
You may be wondering how Robinhood makes any money with $0 commission fee. The answer to this is through order flow payment. Robinhood receives orders from its client base, and then sells these orders to market makers for a small price. Due to the large amount of orders Robinhood receive, this accounts for a substantial amount of their revenue. Order flow payments increased 339.6% in the first quarter of financial year 2021, accounting for more and 80% of company revenue.
- 340,000 users at inception, has now grown to 18 million
- 32969% increase in revenue 2015-2020
- Pre IPO, has been valued at US$20 billion
They are now looking to shake up wall street with an IPO on the 28th July. With a target valuation of US$35 billion, this is one of the most highly anticipated stock listings of the year.
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